Dakryn's Batshit Theory of the Week

[Dak]

Doesn't Marx attack subjective valuation in pricing as leading to exploitation?

Edit: He specifically dismissed the pricing mechanism as being supply and demand driven/marginalist,

http://en.wikipedia.org/wiki/Marginalist

Of course there will be a base price, which will take into account the total cost of production + a reasonable guess at demand input. If the demand is much too low, then eventually production stops due to a lack of funding. If it's high, production increases or the price remains high limiting demand.

And this is, from an economic perspective, probably the achilles heel of communism. Without a price mechanism, you cannot determine demand and therefore cannot adequately supply. It creates a knowledge problem. This is part of the reason for starvation and other such central planning horrors from Russia/China. It's also why capitalist oriented cultures are able to innovate more quickly on the consumer side. Prices also do not just inform whether or not customers will buy the end product, but along the entire process of production. If the prices (costs) involved in creating a widget are less than the widget is expected to bring in sales, then the widget is not made. If the sales far exceed the prices (cost) of production, more are made.

Russia and China depended greatly on market prices from capitalist countries to make decisions, but those only helped to a minor degree because they didn't have the price information from their own region/people.

Not everyone has the same wants at the same price points. There are many things I don't want all that much, but if the price dropped far enough I might be inclined to buy. Someone else's value scale may be inverted from mine. Then you have market saturation points, which does not have to equal 100% saturation, but 100% saturation of adopters. Without a price mechanism, too much or too little of a small overall selection will be made, simply due to a lack of information.

 

[Einherjar86]

From what I know, Marx's critique takes Smith and Ricardo as its primary targets, neither of whom argued for the subjective theory of value. I admit that I'm slightly out of my element, but I've always associated the subjective theory of value with the Austrians and other later liberalist theories of economics. Marx didn't say much about this because it hadn't been significantly formulated. I think the later libertarian or Austrian economists read this criticism into Marx's work because of his polemical stance against capitalism (or, more correctly, the "political economy").

David Harvey published a book called The Limits to Capital that is widely regarded as one of the best expositions of Marx's theory. In that book, he writes:

Value is, in the first place, 'a definite social mode of existence of human activity' achieved under capitalist relations of production and exchange. Marx is not primarily concerned, therefore, with fashioning a theory of relative prices or even establishing fixed rules of distribution of the social product. He is more directly concerned with the question: how and why does labour [sic] under capitalism assume the form it does?

He goes on to claim:

The paradox to be understood is how the freedom and transitoriness of living labour as a process is objectified in a fixity of both things and exchange ratios between things. Value theory deals with the concatenation of forces and constraints that discipline labour as if they are an externally imposed necessity [...] It follows that labour is not and never can be a fixed and invariable standard of value. Marx mocks those bourgeois economists who south to establish it as such. Through analysis of the fetishism of commodities, Marx shows us why 'value cannot stalk around with a label describing what it is' and why bourgeois political economy cannot address the real question: 'why labour is represented by the value of its product and labour time by the magnitude of that value.'

 

[Dak]

This concept of "labour time" or "socially necessary labor time" as some sort of ambiguous method of constructing value is ridiculous. First of all, Marx prefers to deal in aggregates, like modern macro does. The problem is it's completely disconnected from micro, and thusly relatively blind.
Secondly, the ambiguity of the terminology compounds with the ambiguity/arbitraryness once put to work. Will you be able to certainly acquire every single piece of necessary information to create this accurate average of of the aggregate, and therefore determine the "non-exploited price? This is how US Government statistics work in many cases. Or how certain stock indexes work. It's not a complete picture (and it's correctness within it's incompleteness is debatable), it's based on the needs of the statisticians or their employers.

 

[Einherjar86]

This concept of "labour time" or "socially necessary labor time" as some sort of ambiguous method of constructing value is ridiculous. First of all, Marx prefers to deal in aggregates, like modern macro does. The problem is it's completely disconnected from micro, and thusly relatively blind.

That's a bit dismissive.

Secondly, the ambiguity of the terminology compounds with the ambiguity/arbitraryness once put to work. Will you be able to certainly acquire every single piece of necessary information to create this accurate average of of the aggregate, and therefore determine the "non-exploited price? This is how US Government statistics work in many cases. Or how certain stock indexes work. It's not a complete picture (and it's correctness within it's incompleteness is debatable), it's based on the needs of the statisticians or their employers.

The terminology isn't ambiguous if you actually take the time to understand it. Socially necessary labor time isn't constant; it isn't absolute or universal. It's just a term for the required labor in certain situations. I'm not sure what you're so hostile about. I'm trying to debunk your accusation of objective value. As far as that goes, I don't really think Marx is liable.

 

[Dak]

It can be objective while fluid. Edit: Obviously you missed my point about the arbitraryness involved in trying to formulate said average.

As far as dismissing disconnecting aggregate based views, it's not exactly rocket science. Aggregates require their individual contributions. Which occur first and independently. It's looking at things backwards and then assuming it's looking at them forwards.

 

[Einherjar86]

You're always saying that there are things that exist regardless of our perception of them; and yet now you keep trying to claim subjective value. The actual existence of this subjective value means that, for all intents and purposes, it is objective. It it occurs in the world, in the actual social relations between actors, then it is an objective fact. You always proclaim this point; why abandon it when value comes into question? It doesn't have to be the same for each transaction, but it can be objective (as you said). There's nothing fallacious or troublesome about this. Marx simply looks for a term that can encapsulate the value that derives from the actual relations between people. It doesn't exist in an essential form; it simply exists in a perceived form that grants it an objective power.

He's looking at things first and foremost from a concrete perspective. He's simply arguing that you cannot determine the nature of the political economy from single, individual interactions.

 

[Dak]

You're always saying that there are things that exist regardless of our perception of them; and yet now you keep trying to claim subjective value. The actual existence of this subjective value means that, for all intents and purposes, it is objective. It it occurs in the world, in the actual social relations between actors, then it is an objective fact. You always proclaim this point; why abandon it when value comes into question? It doesn't have to be the same for each transaction, but it can be objective (as you said). There's nothing fallacious or troublesome about this. Marx simply looks for a term that can encapsulate the value that derives from the actual relations between people. It doesn't exist in an essential form; it simply exists in a perceived form that grants it an objective power.

Objective in reference (after the fact even), not objective as embodied in the thing itself, and then we must control for relative methods of valuation. Is the widget worth $10? Two eggs? Four horses? To whom? When? In how many increments? Etc.

Today I might spend $10 on a widget. Tomorrow I may not. If I do today, I may not want another. I might relinquish 10$ but not 11. You might relinquish $30. Marx or a macro economist looks at those two purchases and decides the "fair" price, or the "market price" is $20. Which is absurd.

He's looking at things first and foremost from a concrete perspective. He's simply arguing that you cannot determine the nature of the political economy from single, individual interactions.

I don't see that at all. The most important point about making decisions/suggestions/theory/etc based on aggregate data is that it is by it's very nature top-down, which again, is the "nature of the beast" of accepted economics. Built for the elite, by the elite.

 

[Einherjar86]

Objective in reference (after the fact even), not objective as embodied in the thing itself, and then we must control for relative methods of valuation. Is the widget worth $10? Two eggs? Four horses? To whom? When? In how many increments? Etc.

Today I might spend $10 on a widget. Tomorrow I may not. If I do today, I may not want another. I might relinquish 10$ but not 11. You might relinquish $30. Marx or a macro economist looks at those two purchases and decides the "fair" price, or the "market price" is $20. Which is absurd.

Not true at all; he makes use of abstracted labor to understand the phenomenon that takes place in the politico-economic environment. He doesn't posit any values/prices of commodities whatsoever.

I don't see that at all. The most important point about making decisions/suggestions/theory/etc based on aggregate data is that it is by it's very nature top-down, which again, is the "nature of the beast" of accepted economics. Built for the elite, by the elite.

How is it elitist? Marx is not the hegemonic structure, and he certainly isn't working for their benefit. He's formulating a language by which to talk about how a complex system operates, and you can't expect anything less than abstract terminology. You need to try and make an effort to see why he writes that way.

True proponents of the free market have a lot to learn from Marx; they're just scared to do so, it seems to me.

 

[Dak]

Well I haven't banned myself from reading Marx(it's just low on my current priority list), and there's already agreement that what I would call corporatism will turn looking like it does. That's as irrelevant to anarcho-capitalism as Stalinist death squads is to Marx's economic treatise.

I'm not solely referring to Marx in saying elites(although he definitely fell among the "bourgeois"). I'm talking about macro being set against micro. Top down vs bottom up.

 

[Einherjar86]

It's fine with Marx being low; in the same way Hayek is on my bookshelf, but has suffered more than mild neglect. But he should always be on libertarian radar (not in the way that he currently is), and his perceived criticisms of capitalism really need to be recontextualized, I think. His critique is of the political economy; of course, he conflates this with capitalism, which you and many other libertarians (I use this term for lack of a better/easier one) find troublesome. Then every time he writes "capitalism" try replacing it with "political economy."

Also, he can't really be attacked for laying out an argument against subjective value theory because it wasn't historically formulated at that point (again, that I know of; I know Bastiat was around, but I'm not sure how relevant he was to Marx's work). He can't be arguing against the Austrian School, which came later. He can certainly argue against the market as setting prices, and you can take issue with that; but I'd suggest that if he claims that the market doesn't determine price, it's because he's critiquing the market in a political economy, which he perceives as being manipulative and the opposite of "free."

In creating a theory of emancipatory politics and economics, he has to try and set himself at a God's-eye-view. Ultimately, there are many flaws with this; but that holds true for any theory. Marx views the actual social relations between individuals - workers, business owners, entrepreneurs, etc. - as comprising a vast and ultimately real force of power in the world. This power holds potential value in its ability to shape/influence its environment (i.e. to make goods). It isn't actual, essential value; it's abstract value, specifically value as hypostatized by those social relations that actually do possess the power to make change. The only way Marx can describe this is as socially necessary abstract labor. He doesn't believe value floats enchanted throughout the populace; but the system operates as though it does, and this plays an undeniably real and concrete role in those market societies.

 

[Dak]

George Mason Economics Professor.

 

[Einherjar86]

I'll try and watch some of that tomorrow.

 

[Dak]

I think you'll find his position more practical than what you may believe mine to be, although I agree to some degree with his conclusion, which are that there are degrees of the state and anarchy that must be compared as they are relative, and then their desirability may be compared relative to the specific region/people in question based on the way things are at the time, not best case in some theoretical future.

 

[Prismatic Sphere]

I think an AnCap paradigm is the most compatible with human nature.

 

[Dak]

http://www.naturalnews.com/039603_sinkholes_Louisiana_land.html

So I heard about this a year ago or more, and assumed since there was nothing really more about it, it must have stopped/been mitigated. Apparently not.

 

[Dak]

 

[Einherjar86]

I think you'll find his position more practical than what you may believe mine to be, although I agree to some degree with his conclusion, which are that there are degrees of the state and anarchy that must be compared as they are relative, and then their desirability may be compared relative to the specific region/people in question based on the way things are at the time, not best case in some theoretical future.

I haven't watched the whole thing; I made it through about fifty minutes or so. Every single situation he cited necessarily appealed to some form of human intention (i.e. his vision of an anarchist free market society only works if all participants act intentionally and this intention can be traced back to the actors). This troubles me slightly.

Furthermore, it seems to proceed according to the premise that individuals do not change their behavioral patterns. An actor who cheats someone, suffers due to a spoiled reputation, and then experiences a genuine rehabilitation seems to have no hope of getting back into market exchange.

I think an AnCap paradigm is the most compatible with human nature.

This suggests that there is a constant and normative "baseline" of human nature. Or do think that anarcho-capitalism is adaptive enough to accomodate a multifarious humanity?

 

[Dak]

I haven't watched the whole thing; I made it through about fifty minutes or so. Every single situation he cited necessarily appealed to some form of human intention (i.e. his vision of an anarchist free market society only works if all participants act intentionally and this intention can be traced back to the actors). This troubles me slightly.

Well I know we've been around on this before, but particularly in business or politics, there is intent, even if there are unintended consequences. This is why businesses and politicians spend millions on R&D, advertising, market testing, etc. This is also why you or I will often look item or music reviews, etc. before buying.

Now as he pointed out, a lot of this can go out the window to someone with a High Time Preference. But High Time Preferences usually fail in the long term from an economic perspective (and in the short term to, from an economic perspective or HTP perspective). But those people don't care.

Furthermore, it seems to proceed according to the premise that individuals do not change their behavioral patterns. An actor who cheats someone, suffers due to a spoiled reputation, and then experiences a genuine rehabilitation seems to have no hope of getting back into market exchange.

Yes, it would be difficult. Not impossible. Why is this disturbing? How do we demonstrate we have made a marked change in mindset? By action. How much action does it take to demonstrate a sincere and real change after years of the other? A lot.

This suggests that there is a constant and normative "baseline" of human nature. Or do think that anarcho-capitalism is adaptive enough to accomodate a multifarious humanity?

So you don't think Maslow's heirarchy is somewhat relevant? I agree that some elements can be shifted around, but.....

 

[viewerfromnihil]

http://www.naturalnews.com/039603_sinkholes_Louisiana_land.html

So I heard about this a year ago or more, and assumed since there was nothing really more about it, it must have stopped/been mitigated. Apparently not.

Another New Madrid earthquake is a pretty scary prospect. The last big one in the early 19th century sent the Mississippi River running upstream for an extended period of time. It is, of course, inevitable and if anything, sparking the quake early would cause it to be less severe than if we let the plates reach their breaking point. The factors spoken of in the article don't cross me as quite significant to spark an earthquake though.

 

[Dak]

Another New Madrid earthquake is a pretty scary prospect. The last big one in the early 19th century sent the Mississippi River running upstream for an extended period of time. It is, of course, inevitable and if anything, sparking the quake early would cause it to be less severe than if we let the plates reach their breaking point. The factors spoken of in the article don't cross me as quite significant to spark an earthquake though.

Yeah, when something's inevitable at some point, I don't get too concerned when the possibility is moved up. I'm just pointing out the effect of silence, as well as the immediate effect of the toxicity/potential explosiveness of the sinkhole itself.

There's an irony in the current economic arguments, where Keynesianism on it's mere surface makes a ton of sense for a country: Save for the rainy day. Catastrophic economic or tectonic or meteorologic events count as national "rainy days". But of course "Saving" has not only never happened, it's outright denigrated and policy-prohibited by neo-keynesians and monetarists.